Choosing a career in life is a huge decision to take, and it means choosing a path and staying committed to it. So, it must be a decision you take your time deciding. Among the many career paths out there, one of the most sought-after is the finance pathway.
There are many reasons, from the prestige that comes with it to the lucrative paycheck that lands every month. It’s an attractive career path in its own right. But even with all these reasons, is it still the career path for you? To find out more about a finance career, keep reading.
Choosing a Path
Before deciding on what career path to take, understand it’s a long-term decision, and even if not a long-term one, it should be a path, you can cope with and succeed in. Of course, with hard work and reliance, anyone can succeed in a career – but we also understand that people do better and are more suited for one career than another. To find out if a finance pathway is what you want, ask yourself these questions:
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What Draws Me to Finance?
It’s vital to understand what draws you to finance as a career path. Is it the numbers or the portrayed lifestyle of investment bankers? The thrill you think you can get from it? Or the lucrative pay? It may be because of your family or friends. Whichever of the following opinion draws you to finance, remember it has to be one that can take you through the course and even work for a couple of years. No half-baked reason will suffice when making your decision.
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What are My Strong Points?
Understanding your strong points is an enormous asset in deciding on a career in finance. Seat and ask yourself if your strong points are in analytics, paying attention to details, being subject to rules and regulations, and being a big fan of numbers.
If you don’t fancy any or all of them, reconsider. If you are more creative, like the freedom to express yourself, and love working with people more than numbers, finance may not be for you.
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What is My End Goal with Finance?
Everyone has an end goal for their career, whether it’s to reach the top of an organization or stay in the job long enough to save money and start your own business. We don’t go into a career path without thinking things through, so your end goal will matter. How many years do you intend to spend? What happens if plan A doesn’t work? And so on. Having a good idea is crucial when deciding.
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What is The Sunk Cost of Switching Over to Finance?
According to Harris Poll, suppose you are switching over from another career to finance, like 52% of the US labor force plan to do. Then it’s a good time to ask what precisely is the cost of leaving that field to pursue a finance degree or professional certification? Is it worth the physical and mental energy put into it?
Once you have answered these questions and are satisfied with your answers, then go for it. Read on to learn more about finance.
Source: thehansindia.com
What is Finance?
Finance is a term that isn’t new to you, our readers. A simple way of defining finance in its entirety is money management. It may sound oversimplified, but that’s it. Under money management, we will find activities like budgeting, investing, hedging, borrowing, and saving. The subject of finance exists so you, companies, and governments can manage their money better.
Types of Finance
Finance is a broad subject, and we can divide it into three comprehensive parts, namely:
- Personal Finance
- Corporate Finance
- Public Finance
Each of them needs certain skill sets to build a successful career path. This section will look at each of them.
Personal Finance
As the name suggests, it is the process of managing individual assets. This includes budgeting, banking, mortgage, insurance, investments, retirement planning, and tax management for the individual. The personal finance officer advises and acts based on the client’s needs. Individual needs vary from one individual to the other, from managing all assets to helping with an aspect of their finance, e.g., credit score or tax calculation.
Corporate Finance
Corporate finance entails financial activities carried out to maximize the value of a company and its products. Some activities include planning finances, risk management, capital investments, capital financing, dividends, and return on capital. Depending on the type of corporation, operations may differ a bit. An organization (like a hospital), an investment bank, or an accounting corporation will have different core financial activities. Each one will need individuals with a particular skill set to function effectively.
Public Finance
Public finance, at its core, is managing the expenditures and revenue streams of a nation. The finance activities include budgeting, taxing, and debt management within and outside the country. Fiscal policies are policies meant to control government expenditure and improve revenue. The goal of those in public finance is to manage government funds properly on expense – while also managing the revenue streams from interest rate, tax, and exports.
Benefits of a Career in Finance
Are you still wondering if a career in finance is for you? If so, keep reading. According to the US Bureau of Labor Statistics, jobs under the business and finance category will grow by 8% from 2020 to 2030. This is as fast as the average of most occupations. The more intriguing bit is that the median salary of a finance career is $76,570 compared to the median of all other occupations, which came at $45,760. These stats show there is more earning potential in finance. Let’s now look at some other advantages of venturing into this career path.
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A Defined Roadmap
Most finance roles have a defined road map you can take if you wish to stay on up to retirement. The criteria for promotion hinge on putting in the effort and getting the required qualifications. These requirements can be measured and can help you plan a road map to the top of your career.
Source: Corporate Finance Academy
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Diversified Career Options
One beauty of finance is that one has several options to choose from. It is a broad field, and because of that, many people often have to specialize in one area to get a shot at reaching the summit of their career. This can be important when someone wants to transfer to another arm of finance. Most times, the individual needs to write some professional exams and transfer to that field. Since the foundations are similar, it’s easier to transition into a new role.
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Compensation
One of the frequently asked questions is what do finance jobs pay? The answer is they pay well. The entry-level of most finance course qualifications range between $55,000 and $107,000 based on the industry and location. This information is according to the NACE Salary Survey Winter Report. This makes it both lucrative and one of the most attractive jobs.
Even with all these benefits and more, the road to building up a career in any finance-related course can be demanding and require a lot of effort from you.
Finance Careers
Now that we have noted some benefits of a finance career, let’s briefly look at some careers available to you:
- Financial Analyst
- Financial Accountant
- Actuary
- Public Accountant
- Investment Banker
- Credit Analyst
- Risk Manager and many more roles
We will briefly look at what each role entails.
Financial Analyst
Their goal is to guide businesses and individuals to make profits from investments. They do this by analyzing stocks, bonds, and other investment instruments, and then they make their decisions based on analyzed data to make profits. A financial analyst earns on average $70,669 and can make up to $104,296 in a year.
Financial Accountant
A financial accountant keeps track of the financial operations of an organization. Their role is to make sure there are adequate funds to run the business, report on the finances, alert management when suffering from liquidity issues, secure other sources of financing, and so on. A financial accountant earns on average $65,339 and can make as much as $93,600 in a year.
Actuary
Their primary role is calculating, reviewing, and presenting data related to the risks of projects or investing in a company. Their aim is to help companies manage their financial risk. Probability and statistics are at the core of their calculation, so it’s a tough job – but equally rewarding. They earn, on average, $117,000 and can earn as much as $177,800 in a year.
Public Accountant
The public accountant does a similar set of duties to the financial accountant, but for the government. Their jobs tilt more toward offering financial recommendations, providing tax services, and creating a financial report. These public servants earn, on average, $83,664 and can earn up to $136,900 per year. (Note, this figure is for CPA certified public accountants).
Investment Banker
The investment banker seeks to raise capital for companies or individuals by exploiting opportunities in the market. They research before issuing debts and selling equity to meet their client’s needs. On average investment, bankers earn $57,800, but this can go up to $134,162 a year.
Credit Analyst
Their role is to assess the loan applicants to find if they qualify for a credit facility. They end up either recommending them for approval or denying them the loan. Banks, credit card companies, and investment firms hire these finance professionals. On average, credit analysts earn $62,800 and make up to $110,900 a year.
Risk Manager
A risk manager in a corporation is in charge of all risks regarding the organization. Financial, security, and safety risks are all assessed by them. They also develop policies to minimize risks and monitor them. They file their report to top management. These professionals earn, on average, $87,610 and can make up to $152,486 per year.
These and many more careers are available to you on a finance pathway.
Note, that all salary averages were taken from indeed.com/career/salaries, descriptions of other positions in finance can be found in a special information block on SignalHire.
How to Get into Finance?
Source: Wall Street Prep
First, you need a bachelor’s degree in finance or accounting to start with a solid foundation. Today, a bachelor’s degree isn’t enough in this field, so you would need to further your education with professional courses. Some popular ones include:
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CFA (Chartered Financial Analyst)
Financial analysts or those who work in the banking sector write it. To qualify, you need to pass three exams, and these exams are known to be quite hard.
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ACCA (Association of Charted Certified Accountants)
A universally accepted qualification, ACCA is written to qualify as a chartered accountant. Depending on what level you start the exam, you can write 13 papers and as few as 8.
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CIMA (Chartered Institute of Management Accountant)
CIMA is for those who are focused on management accounting. It is the certificate that authenticates your expertise in that field. There are 12 papers in total, and depending on your other qualifications (a bachelor’s or master’s degree), you may be required to write as little as 5 to 6 papers.
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FRM (Financial Risk Manager)
The FRM is a risk certification offered by the Global Association of Risk Professionals (GARP). It is for those who have studied risk management and want to advance to the corporate ladder. The certification can open doors to positions like Chief Risk Officer, Senior Risk analyst, or Head of risk operations.
Other certifications include:
- CPA (Certified Public Accountant)
- CAIA (Chartered Alternative Investment Analyst)
- CFP (Certified Financial Planner)
- CMT (Chartered Market Tactician)
There are many more out there, but the goal is to have a fruitful career and take one or more of these professional exams to climb the corporate ladder. Many professional bodies also have mandatory courses to update you on the ever-changing financial environment.
Final Remark
In conclusion, only you can answer the question, “Is finance a good career path?” While there are perks, status, and good pay attached to life in finance, there are also hard work, perseverance, and sacrifices to make. The finance sector will remain relevant, and the compensation will be stable in the future.
